The Role of Organizational Factors in Achieving Reliability in the Design and Manufacture of Subsea Equipment

Katharine Parkes, Melinda Hodkiewicz, and David Morrison

University of Western Australia, Crawley, Western Australia, Australia

Abstract Failures of equipment used in deepwater oil and gas production are potentially hazardous, difcult and costly to rectify, and damaging to the environment; a high degree of reliability over many years of continuous operation is therefore an essential requirement of subsea systems. Although technical issues have been widely investigated, less is known about the organizational factors that promote high reliability in the design, manufacture, and installation of these systems. This review draws on studies of high-reliability manufacturing and process industries to examine the roles of intraorganizational factors (particularly organizational culture) that may promote or detract from the achievement of high reliability in subsea systems. External factors, such as supply chain coordination, are also considered. Studies of organizational change designed to enhance the reliability of design and manufacturing processes are rare in the subsea industry, but relevant issues arising from change initiatives in other organizational settings are discussed. Finally, several areas are identied in which systematic industrybased research could contribute to identifying critical elements in the development and operation of subsea systems and, hence, reduce the risk of failures. C 2011 Wiley Periodicals, Inc.

1. INTRODUCTION
In recent years, subsea systems have played an increasingly important role in deepwater oil and gas production. Such systems impose complex engineering demands, coupled with a requirement for many years of continuous, fault-free operation. These requirements have been addressed in the development of formal standards for system reliability and technical risk management (American Petroleum Institute [API], 2009), and testing and qualication procedures have been progressively rened (Horan, Starkey, Lucas, & Wheeler, 2008).
Correspondence to: Katharine Parkes, School of Psychology, University of Western Australia, 35 Stirling Highway, Crawley, Western Australia 6009, Australia. Phone: +61 8 6488 3267; e-mail: kathy.parkes@uwa.edu.au Received: 26 November 2009; revised 13 December 2010; accepted 5 January 2011 View this article online at wileyonlinelibrary.com/journal/hfm DOI: 10.1002/hfm.20290

More generally, modeling and simulation approaches to reliability engineering have become increasingly sophisticated (e.g., Zio, 2009). However, achieving high reliability in complex systems also depends critically on the culture and environment of the organizations in which the systems are designed and produced. This article reviews information from a wide range of literature concerned with organizational characteristics conducive to the achievement of high reliability in the design and manufacture of complex engineering systems, with particular reference to equipment used in subsea oil and gas production. Subsea developments continue to expose operating companies to unforeseen technical demands and very high costs, while requiring exceptional standards of equipment reliability (Deans, 2009; Denney, 2003; Horan, Starkey, Lucas, & Wheeler, 2007). Subsea systems are typically located in remote deepwater areas; thus, once deployed, repair or maintenance necessitated by failure of a component is likely to involve
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elaborate technical procedures, if indeed it is possible at all. The need to avoid early-life failures is especially crucial, as such failures are not only difcult and costly to rectify but also can seriously delay scheduled production, thus incurring further costs. Moreover, attempts to remedy subsea malfunctions expose personnel to the risks of deepwater operations; potential environmental damage resulting from subsea failures is a further concern. Currently, in view of the increasing complexity of subsea production and process systems, and the high costs of recovery in the event of failure, it is recognized that the reliability of subsea systems has never been more critical (Deans, 2009, p. 118). Designing and implementing solutions appropriate to the remote operating environment is an essential part of the process of producing subsea equipment; at every stage, from initial conceptual design to eventual deployment, reliability has to be built into the system. To maximize reliability, the design, manufacturing, and deployment process requires effective coordination and communication between the operating company and the entire supply chain of contractors, manufacturers, and specialists. At each stage in the process, a high level of integration across organizations (each with different characteristics, reecting cultures, structures, and functions) is critical to system reliability; effective integration is particularly important as the probability of failure at each phase of the procurement process has a multiplicative effect on nal reliability. In addition, tight handover schedules can exacerbate problems associated with transfer of ownership and acceptance of responsibility at each stage in the process. It is not surprising, therefore, that reliability improvement has been identied as a core prerequisite to the future selection of subsea solutions for deepwater and marginal developments (Williams, Robertson, Haritonov, & Strutt, 2003). Noting the lack of studies that address the role of organizational characteristics and behavior in relation to subsea reliability, Busby and Strutt (2001) pointed out that If an understanding of organizational shortcomings lags understanding of the technical mechanisms of failure, such as wear, corrosion, cracking and so on, engineering systems will continue to fail in ways that the outside world will regard as being foreseeable (p. 1471). However, in other organizational contexts, lessons learned by researchers and reliability specialists offer some understanding of how organizational culture,
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structure, and associated processes inuence reliability. In particular, from the point of view of creating a highreliability organizational culture, subsea engineering has much in common with aviation and space technology, including satellite deployment and space exploration (e.g., Heimann, 2005; Sadeh, 2006). In each case, opportunities for correcting faults that occur in service are very limited, and postdeployment access or asset retrieval (if possible at all) requires costly technical resources. Such systems impose exceptional demands for fault-free operation. Moreover, in other industries, such as automobile manufacture, software design, and complex medical equipment, high-product reliability has become increasingly important to ensure continued competitiveness in a global marketplace (e.g., Vogus & Welbourne, 2003). In each of these settings, organizational characteristics that promote high reliability are essential to achieving successful outcomes; drawing on the literature in this area, this article focuses on the achievement of high reliability in subsea systems. First, to set the topic in context, stages in the process of commissioning, manufacturing, and deploying subsea systems are outlined, highlighting aspects of the industry that tend to mitigate against system reliability.

2. THE SUBSEA INDUSTRY

The subsea oil and gas industry operates worldwide, but only a limited number of organizations have the capacity, skills, and physical resources to contribute. The industry is highly capital intensive with long lead times between the initial investment and nancial returns. As shown in Figure 1, there are typically six phases in the life cycle of oil and gas developments: 1) concept, 2) design, 3) fabrication and procurement, 4) installation and commissioning, 5) operating, and 6) decommissioning. The operational phase usually extends over many years, hence the importance of long-term reliability. The initial stage of development, the concept or basis of design, is usually undertaken by the asset owners engineering team. In contrast, at the design stage, multiple organizations are involved, each with its own technical expertise; designs are then tendered to other organizations for procurement and fabrication. Consequently, many parties take part in the development of a single system. For example, as illustrated in Figure 2, a manifold destined for installation in a subsea module on, say, the North-West Shelf of Australia may
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Figure 1

Phases in the subsea asset life cycle.

incorporate components and processes originating from all over the world. Thus, several different countries, and companies with different cultures and languages, are likely to be involved in the manufacture of a single system. Subsea oil/gas systems are typically installed in remote deepwater areas. The number of organizations involved during installation is relatively small, as few companies have the required physical infrastructure (such as lay barges) to manage the installation process; however, cost and time pressures are particularly severe at this stage. Following installation, the system is commissioned and, nally, handed over to the operating company. The rst few months of operation are critical as faults occurring early in the life of a subsea system may give rise to costly failures and production delays. Given the scale of investment and the pressure for nancial return, the consequences of early-life failure are likely to be highly detrimental to the asset owner and, potentially, for the contractors/suppliers involved. To minimize the risk of early-life failures, considerable effort is made at the design stage to ensure that the system meets specied reliability standards. In seeking to achieve the required reliability level, extensive use is made of engineering processes such as reliability block diagrams, failure modes and effects analysis, fault and event tree analysis, and simulation (Rausand & Hyland, 2004). Values for these models are based on experience of previous failures, generic industry databases, and expertise of the team. An issue of particular concern to reliability specialists is how to express and quantify common cause system failures (i.e., failure of multiple components due to a single occurrence or condition).

Edwards and Watson (1979) classied the reasons for common cause failures at each phase of the life cycle, identifying inadequacies in control, operations, design, quality control, inspection, testing, procedures, supervision, and communication. In the majority of these cases, the behavioral characteristics of humans, and the nature, appropriateness, and timeliness of their decisions and actions, are potential contributory factors. However, accounting adequately for the human and organizational characteristics that inuence system reliability remains a challenge for engineers seeking to develop reliability models. This challenge can be more effectively managed if the role of organizational factors, and their impact on the attitudes, behaviors, and decision making of organization members, is understood in relation to the nature of the subsea industry (specically, dependence on multiple companies worldwide; long supply chains; the need to coordinate equipment, components, and documentation across countries, organizations, and work groups; severe time and cost pressures). In seeking to address the role of organizational factors (particularly organizational culture) in this context, particular attention is given to the relatively few published documents that directly address issues of reliability in the petroleum industry; in addition, the review draws widely on research carried out in other manufacturing and process industries with high-reliability requirements. The article also takes into account our insights from inspecting subsea failure records and lessons learned databases, and from discussions with senior petroleum industry managers responsible for subsea developments. In the following review sections, the topic of organizational culture is addressed rst, reecting the

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Figure 2

Diversity of organizations and geographic locations involved in the installation of a subsea manifold.

primary importance of culture in the achievement of high reliability. Thus, theoretical approaches to organizational culture, their relevance to high-reliability environments, and, more specically, the roles of leadership, communications, error management, and collective mindfulness in promoting high reliability, are considered in Section 3. Culture is also an important factor underlying effective organizational learning and knowledge management processes, which are essential prerequisites for high reliability, as described in Section 4. Other relevant factors considered include the contribution of human resources policies to creating high-reliability organizations (Section 5), and organizational structure, and its implications for the ow of reliability information and feedback across hierarchical levels (Section 6). The use of capability maturity models for assessing organizational capability as applied to the achievement of high reliability is described in Section 7. Finally, extending the material in the previous sections, Section 8 discusses the process of organizational change designed to enhance reliability. Although the review draws on ndings from a wide range of manufacturing and process industries, the focus throughout is on identifying organizational factors relevant to the achievement of high reliability in the design and manufacture of subsea equipment.
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3. ORGANIZATIONAL CULTURE
The meaning and interpretation of the term organizational culture has been extensively debated (e.g., Choudry, Fang, & Mohamed, 2007; Denison, 1996; Guldenmund, 2000) but, as Reiman, Oedewald, and Rollenhagen (2005) point out, no clear or widely accepted denition has emerged. In the present context, organizational culture can be most readily understood as a combination of the attitudes, experiences, beliefs, values, and norms of an organization. It develops over time as people and the environment change, and organizational processes and procedures, both explicit and tacit, evolve (Resnick, 2007, p. 1483). More formally, Schein (2004, p. 17) denes organizational culture as a pattern of shared basic assumptions that was learned by a group as it solved its problems of external adaptation and internal integration, that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think and feel in relation to those problems. Scheins model distinguishes three levels of culture, ranging from artifacts that represent the visible surface level; to norms, espoused beliefs, and values as an intermediate level; to basic assumptions (unconscious beliefs, perceptions, thoughts, and feelings) that represent the deepest level of culture. In work settings, these core assumptions are
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reected in ways of structuring and organizing work processes and tasks. For Reiman and Oedewald (2007), culture incorporates three broad elements: 1) organizing of work, practices, structures, competence of personnel, tools and history; 2) internal integration, climate, and norms; and 3) conceptions concerning the demands of the work, organization, safety, and effectiveness. In this sociotechnical model, organizational culture and the organizational core task (i.e., the shared objective or purpose of the organizational activity) are closely linked in a bidirectional relationship. Thus, culture includes the process of formation and reformation of conceptions concerning the organizational core task and the means to fulll it, and the core task creates constraints and requirements for activity, which impact on culture. We use these concepts to develop a qualitative analysis model for cultural assessment.

3.1. Organizational Culture and the Achievement of High Reliability

Organizational culture in the broad sense previously outlined is widely believed to play a crucial role in promoting high reliability (Bierly, Kessler, & Christensen, 2000; Koufteros, Nahm, Edwin Cheng, & Lai, 2007; Wilkins & Ouchi, 1983). Weick (1987) considered organizational culture to be the source of high reliability, while Resnick (2007, p. 1483) observed that the effects of organizational culture on system reliability cannot be understated. Moreover, measures of organizational culture predict reliability-related outcomes, including customer satisfaction and the quality of products and services (Balthazard, Cooke, & Potter, 2006; Bates, Amundson, Schroeder, & Morris, 1995; Chatman & Jehn, 1994). A culture of reliability manifests itself in the shared beliefs of organizational members about what constitutes appropriate, competent, and reliable behavior, and in high levels of communication among members. High-reliability organizations engage in rigorous learning, continually search for improvement, undertake systematic feedback and review, and reward the discovery of error; they reect on practice, actively seek information, and welcome new ideas (Busby, 2006). This form of socialization allows authority and decision making to be decentralized to the lowest possible levels of the organization with condence that subordinates will have the necessary knowledge, skills, and discretion to take appropriate actions. Such an approach

exemplies one of the cornerstones of sociotechnical systems design, a typically at organizational structure, in which control over processes and the authority to act are located as close as possible to potential sources of system discrepancies, or variances (see Clegg, 2000). Thus, relative to more hierarchical structures, jobs are less specialized and more complex, necessitating technically qualied, self-motivated employees. In contrast to a culture that promotes reliability, a maladaptive or dysfunctional culture has a negative impact on performance; for example, the culture at NASA (which led decision makers to ignore key evidence and overestimate component reliability) has been identied as a root cause of the Challenger and Columbia disasters (Heimann, 2005; Resnick, 2005; Sadeh, 2006; Wong, Desai, Madsen, Roberts, & Ciavarelli, 2005). As described next, several particular attributes of organizational culture (leadership, communication, error management, and collective mindfulness) have been widely identied in the literature as critically important to the creation and maintenance of a culture conducive to the achievement of high reliability. 3.1.1. Leadership Organizational culture is shaped by the philosophy, values, skills, and leadership qualities of the top management personnel. Thus, Schein suggests that the function of leadership is the creation and management of culture (Schein, 1992),and that culture and leadership are two sides of the same coin (Schein, 2004, p. 1). The need for senior management to make a major commitment to reliability, and to actively engage and inspire employees with this commitment, has frequently been identied as essential to a high-reliability culture (e.g., Heimann, 2005; Laporte & Consolini, 1991; Roberts, 1990). In particular, Ericksen and Dyer (2005, p. 917) noted the need for managers to embed an obsession with reliability throughout the organization. Strong managerial commitment to the creation of a reliability culture ensures that the importance of specic behaviors (in this case those that promote reliability) is transmitted clearly and effectively, both internally through the organization and externally to contractors and suppliers. Moreover, unless reliability is given a consistently high priority, funds may be diverted to other company purposes, thus exposing the organization to the risk of a cycle of failure (Heimann, 2005), a process whereby continued success
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in preventing failures leads to resources being progressively transferred to other areas until a failure occurs, when resources are again allocated to enhance reliability, and the cycle repeats. In the petroleum industry, the need for strong leadership commitment to reliability is widely recognized. More specically, in implementing reliability initiatives, the need to engage a key corporate sponsor, or champion, to provide leadership and motivation for change, and local coordinators imbued with reliability fever, has been identied as essential to a successful outcome (Holmer & Moran, 2008). 3.1.2. Communication The importance of frequent and effective communication in promoting high-reliability performance, and the role of senior management in encouraging open communication, has been widely acknowledged; conversely, breakdown of communication is a signicant contributor to major failures and accidents (Bea, 2006; Koufteros et al., 2007; Resnick, 2005; Roberts & Bea, 2001). Frequent verbal interaction among operators facilitates anticipation and regulation, thus allowing system errors and aws to be detected and reversed, or prevented altogether (Carvalho, Vidal, & de Carvalho, 2007). More generally, good communication among employees, both across hierarchical levels and among work groups at the same level, allows information to be shared, problems to be reported, views to be exchanged, and positive interpersonal relationships to be maintained. However, Resnick (2007) warns against overuse of electronic means of communication, noting that managementemployee relationships create challenges that cannot be overcome solely through communication technology; indeed, excessive intraorganizational communication may detract from reliability rather than facilitate it. Weick (1987) emphasizes that face-to-face communication facilitates developing trust and sharing information. He identies lack of face-to-face communication as a contributor to the awed decision to launch the Challenger in unusually cold conditions; this decision was taken during a telephone conference call, thus eliminating nonverbal cues that might have revealed the extent of unease among the engineers involved. Weick (1987, p. 115) also notes the stereotypical description of engineers as smart people who dont talk, suggesting that this characteristic could lead them to devalue direct communication, thus limiting the in492

formation richness needed to manage complex systems successfully. Information richness is highest when people work face to face and declines steadily from face-to-face interaction to interaction by telephone, by e-mail, by letters and memos, and by numeric computer printouts. However, the effectiveness of communication also depends on matching the degree of information richness to the complexity of the topic, avoiding both the inefciency of overcomplication and the inaccuracy of oversimplication. Thus, the right information must be conveyed to the right person at the right time to communicate all necessary implications and consequences without overloading the recipient with data (Resnick, 2005). The physical location of personnel employed on a joint project also has important implications for communication; in particular, Ramanujam and Goodman (2003) note that colocated and distributed work settings differ in information and social contexts. Whereas colocated settings foster face-to-face communication and information richness, distributed work settings reduce information richness by necessitating alternative means of communication, such as telephone and e-mail. Moreover, time and distance tend to reduce the perceived importance of communication among remote work groups engaged in joint projects. Thus, maintaining effective interactions among multiple companies operating in different geographical areas, requires more effort than if organizations operate from a single site. In these circumstances, good interorganizational communication and coordination may require special interface management and document control procedures. These issues are particularly relevant to subsea operating companies and their suppliers who are widely spread around the world, and among whom maintaining effective communication is crucial to ensuring reliable performance of core tasks as projects progress through successive life cycle stages, involving different locations, organizations, and work groups. Figure 3 illustrates the complexity of subsea project management, and the challenge of ensuring effective communications when several organizations participate in a single phase of the procurement process, and, even within organizations, close cooperation is required among groups with different skills sets and expertise. Communication across these work groups may be constrained not only by distance but also by differences in subcultures between groups with different
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Figure 3

Example of different organizations involved in subsea development.

professional and technical backgrounds (Schein, 1996, cited in Choudry et al., 2007). Moreover, transitions across successive project stages typically involve a transfer of responsibility from one organization to another, thus necessitating close cooperation among companies that may have very different cultures. 3.1.3. Error Management Effective communications play a vital role in managing errors at each stage of the system life cycle and, hence, in organizational learning. Research suggests that learning from mistakes is difcult in many organizations because employees often choose not to record or to disclose errors, thus creating a barrier to learning at the group or organizational level; consequently, prevention of future errors is hindered (Zhao & Olivera, 2006). Organizational learning may also be hindered if work is carried out under severe time pressures and the recording and analysis of errors is not given priority by managers, thus limiting opportunities for reective learning. The term error management culture refers to the way in which errors are handled in an organization. Positive error management (which implies that errors are

regarded as opportunities for learning, rather than assigning blame) has important implications for organizational learning; it is also associated with organizational goal achievement, favorable economic performance, and increased protability over time (van Dyck, Baer, Frese, & Sonnentag, 2005). Rather than attempting to eliminate errors altogether, positive error management focuses on reducing the negative consequences of errors and increasing the positive consequences. It includes encouraging communication about errors and sharing error knowledge. Individual attitudes are also important in relation to an organizations error culture; a positive error culture is characterized by a strong orientation on the part of individuals and groups to learn from errors and to communicate, anticipate, analyze, and actively deal with errors (Rybowiak, Garst, Frese, & Batinic, 1999). Two particular issues relating to error management have been identied in the subsea industry. First, Roberts, Strutt, and Eriksen (2001) suggest that fear of a blame culture and possible damage to individual reputations tends to affect the honesty and transparency of feedback information transmitted through the organization and its supply chain. For suppliers, the possibility that any admission of fault could lead to nancial
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penalties further adds to such concerns. Hence, potentially important feedback may be suppressed and thus opportunities for organizational learning may be lost. Resnick (2007) raises similar issues of accountability and blame in a more general organizational context. Second, Busby and Strutt (2001) note that subsea failures are postponed (that is, they do not occur until after installation of the equipment). These failures are due to latent errors (Reason, 1990); such errors occur at earlier stages of the system life cycle (e.g., design and manufacture), but their adverse consequences are not apparent until much later. In subsea systems, the design stage is separated in both time and location from the operational stage; thus, attention to reliability analysis during the design process may be reduced, particularly if there are constraints on time and resources. In sociotechnical terms, the separation in time and place of variances and the opportunity to observe them creates a dual disadvantage; feedback is delayed too long for learning and remediation to occur, and the chain of responsibility is broken. Under these circumstances, individuals must be constantly vigilant to recognize and correct errors in a timely manner, characteristics that contribute to collective mindfulness. 3.1.4. Collective Mindfulness From an organizational perspective, collective mindfulness reects a heightened capacity for vigilance and monitoring and a sensitivity to possible failure that allows people to react to even very weak signals that something is not quite as it ought to be (Coutu, 2003; Weick, Sutcliffe, & Obstfeld, 1999). A mindfulness culture encourages organizations to anticipate future problems, to avoid repeating earlier failures (Pettersen & Aase, 2008), and to be constantly alert for ways to improve products (Brown & Eisenhardt, 1997). The concept of mindfulness has been applied to offshore drilling processes (Aase, Skjerve, & Rosness, 2005), although not in the subsea industry. Nonetheless, collective mindfulness implies that, in the organization as a whole, high levels of alertness and attention are directed to identifying and anticipating possible problems and errors. A culture in which error awareness and mindfulness are deeply ingrained facilitates the achievement of high reliability; the concept of mindfulness is therefore highly applicable to the subsea industry. However, it is also important that the learning that results from mindfulness is captured, shared, and
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widely disseminated. As discussed next, the effectiveness of this process depends on organizational learning and knowledge management.

4. ORGANIZATIONAL LEARNING AND KNOWLEDGE MANAGEMENT

The concept of a learning organization has attracted much attention as companies have become increasingly aware of the importance of knowledge management. A learning organization is an organization skilled at creating, acquiring, and transferring knowledge, and at modifying its behaviour to reect new knowledge and insights (Garvin, 1993, p. 80). In practical terms, learning organizations engage in activities that enable them to develop and integrate their learning, including systematic problem solving, seeking and testing new knowledge, learning from mistakes, and drawing on experience (West & Burnes, 2000). The importance of relying on scientic method rather than guesswork, insisting on data rather than assumptions as a basis for decision making, and using statistical tools to organize data and draw inferences, has also been noted (Garvin, 1993). Organizational learning is the process by which this development takes place; that is, the way rms build, supplement and organize knowledge and routines around their activities and within their cultures, and adapt and develop organizational efciency by improving the use of the broad skills of their workforces (Dodgson, 1993, p. 377). Other authors have emphasized that organizational learning occurs through shared insights, knowledge and mental models, and builds on past knowledge and experience (e.g., Stata, 1989). Three essential processes underlie organizational learning. First, capturing individual knowledge (e.g., in the form of reports, presentations, lessons learned records, and root-cause analyses) requires systematic storage, organization, and continuous updating of information. Second, transfer of knowledge requires that the information is widely disseminated, readily accessible where and when it is needed, and shared among individuals and groups. Third, mobilizing knowledge and experience involves integrating information from different sources (including information about previous failures) to create new knowledge, to solve problems, and to prevent the recurrence of past errors. Organizational capabilities, including cultural and structural
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factors, facilitate effective knowledge management processes, which, in turn, promote favorable company performance (Lee & Lee, 2007). The transition from individual learning to organizational learning depends on employees readiness to learn and willingness to join in shared learning efforts inside and outside the organization (Hendry, Arthur, & Jones, 1995). Cultural factors inuence these social aspects of learning. In particular, constructive cultural styles (characterized by the value placed on achievement, participation, cooperation, and good interpersonal relationships) are associated with positive organizational outcomes, including organizational learning (Balthazard et al., 2006). Thus, individuals working in a constructive culture are more likely to share knowledge and experience, to cooperate in the learning process, and to generate new insights. Conversely, a dysfunctional organizational culture can lead to deciencies in learning; for instance, referring to the need for culture change at NASA, Maya et al. (2005, p. 23) reported that the organization had to overcome the notion that lessons learned are not apt, relevant, or useful. Similarly, a review of safetysignicant events at nuclear power plants identied failure to learn from a previous event as a contributory causal factor (Gertman, Parrish, Sattision, Brownson, & Tortorelli, 2001). More generally, a defensive organizational culture may directly impede organizational learning by discouraging people from sharing and disseminating their knowledge (Gupta, Iyer, & Aronson, 2000). Several authors have suggested that more research is required to increase understanding of organizational learning and the factors that inuence it. Thus, Sagan (2004) notes that relatively little is known about how to use opportunities for organizations to learn from one anothers errors, for instance, through industry-wide bodies. The need for a comprehensive framework for assessing organizational learning, including surveys and behavioral observations, has also been emphasized (Garvin, 1993). Although the material outlined previously does not relate specically to organizational learning in the subsea engineering industry, the issues raised are nonetheless relevant to subsea companies and to their contractors and suppliers. The need to achieve a better understanding of failure causation through developing lessons learned knowledge bases that cover the whole supply chain, and to develop a culture and capability for organizational learning, has been consistently emphasized by subsea specialists (Lucas, 2007; Roberts

et al., 2001; Williams et al., 2003). The importance of organizational learning in relation to reliability is also reected in the criteria specied for achievement of particular levels of organizational capability maturity by companies involved in subsea engineering (see Section 7).

5. HUMAN RESOURCES POLICIES

While signicant research effort has been directed toward understanding the role of organizational culture in promoting reliable performance, human resources (HR) strategies that facilitate the achievement of high reliability have been relatively neglected, although recruitment and hiring policies closely reect and reinforce the culture of the organization. The individual traits and skills of personnel can also be regarded as contributing to organizational culture (Reiman & Oedewald, 2007). Addressing HR management issues in relation to high-reliability performance, Ericksen and Dyer (2005) set out a model of organizational reliability, in which reliability-enhancing HR strategies are considered to impact on reliability through the intermediate role of employee behaviors. The HR policies and practices identied as conducive to the achievement of high reliability include ensuring that all communications reinforce some aspect of reliability (e.g., by rewarding reliability above productivity or efciency); encouraging interaction and teamwork among employees (e.g., offering bonuses based on group performance); selecting and promoting people on the basis of their adherence to organizational values; and rewarding proactive behaviors (e.g., innovations that reduce the risk of errors). Recruitment procedures that select people not only for their technical skills and experience but also on the basis of relevant values, attitudes, and personal characteristics will also reinforce desired reliability-oriented behaviors. Four relevant categories of employee behaviors are described by Ericksen and Dyer (2005). Diligence refers to careful, critical, conscientious, purposeful, attentive, and vigilant behavior; diligent employees continuously anticipate and detect problems (Bierly & Spender, 1995), communicate extensively with co-workers, and report failures and errors promptly. Facileness is the ability to respond rapidly and appropriately to problems and unexpected events. Fluidity involves responding to novel or complex problems with coordinated actions, improvising when necessary, and allowing
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authority to ow to those with relevant expertise. Generative individuals seek to enhance their understanding of work tasks and processes, share information openly, and facilitate the learning of others. The task demands imposed by different phases of subsea design and manufacturing processes may inuence the extent to which specic behavioral attributes are important to achieving reliability; for instance, diligence may facilitate the design stage, while uidity would be more likely to inuence responses to deployment problems. However, all the attributes identied reect the importance of teamwork, interaction, and communication, factors that also contribute to effective team performance in other settings (Molleman & Slomp, 2006; OConnor, ODea, Flin, & Belton, 2008). Other characteristics that promote effective teamwork include social skills, teamwork knowledge, and personality traits such as conscientiousness and extraversion (Morgeson, Reider, & Campion, 2005). Identifying individuals with the ability to work effectively in teams is an important aspect of personnel selection in highreliability organizations. In addition, employment conditions that encourage continuity of service and attachment to the organization promote engagement and a sense of stakeholder ownership. Thus, employment security, favorable pay rates, and exible work/family policies all serve to reduce employee turnover, and hence facilitate organizational learning and reliable performance (Bubb, 2005; Ericksen & Dyer, 2005; Ostermann, 2005). In the subsea industry, continuity of service is particularly important; loss of key individuals with experience of equipment failure has been found to undermine reliability performance (Busby & Strutt, 2001). More generally, Botros, Noel, Brookes, and Perry (2008) note that in the oil and gas industry highly skilled, but scarce, human resources are essential to the development and application of advanced technology; implementing favorable human resources policies is one means by which the recruitment of suitable personnel can be encouraged.

6. RELIABILITY MANAGEMENT FRAMEWORKA MODEL

As previously noted, communication and information ow within and across work groups, and organizational levels are essential to the achievement of high reliability. In the context of reliability management for subsea engineering, Strutt and Brookes (2007) set out a relia496

bility management model, which depicts structural relationships vertically across hierarchical organizational levels and horizontally across work teams with similar roles in different parts of the organization and supply chain. This model represents the nature and direction of four information pathways that contribute to high reliability. Leadership and direction. Managers must be able to set reliability goals, objectives, and visions for all parts of the organization clearly and effectively. In this respect, the model reects the wider literature on the achievement of high reliability, which stresses the role of leadership commitment in promoting reliability throughout the organization. Consistency and coherency. Consistency refers to the vertical alignment of reliability goals, processes, and practices through all levels of the organization and throughout its supply chain. Similarly, coherency refers to horizontal alignment across disciplines and across different groups. Inconsistent/conicting demands and standards may hinder the achievement of consistency, while incoherent practices may arise if groups in different disciplines differ in standard procedures. Feedback. The maintenance of direction and focus in the organization as a whole requires information to be communicated from lower to higher levels of the hierarchy, in the form of feedback about experience in projects and operations that allows adjustments and corrections to future products and processes, and contributes to organizational learning. The reliability management framework outlines the nature and direction of alignment processes and information ow that underlie the achievement of reliability; as yet, however, there appear to be no empirical assessments of the extent to which achieving high levels of information ow in the four directions indicated predicts high-reliability performance in subsea design and engineering. However, there is prima facie support for this model in that communication and information transfer are the most potent factors in promoting effective organizational change (Porras & Robertson, 1992). As described next, formal communication channels are primarily dened by organizational structure.

6.1. Organizational Structure

The structure and working practices of organizations, and their relationship to organizational culture, have been addressed in both theoretical (Bates et al., 1995;
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Walsh, 2004) and empirical research (Koufteros et al., 2007; Nahm, Vonderembse, & Koufteros, 2003). Organizational structure refers to the way responsibility and authority are allocated within the organization, and how work tasks are distributed; formal coordination mechanisms, task allocations, reporting lines, and patterns of interaction all reect the structure of an organization. Organizational characteristics, such as belief in cooperation and a facilitating (rather than controlling) management style, are empirically linked to aspects of organizational structure, including the number of hierarchical layers, the level at which decisions are made, and the use of cross-functional work teams. In turn, structural variables predict use of customerdriven production methods and favorable company performance (Koufteros et al., 2007). These ndings are consistent with the literature on high-reliability organizations, which advocates fewer hierarchical levels, distributing decision making to the lowest level possible, and encouraging open and frequent communication among workers (Roberts, 1990; Weick, 1987; Wilkins & Ouchi, 1983).

thus allowing individuals throughout the industry to benet from sharing lessons learned and other information, and generating new ideas. Such a forum would contribute to meeting the requirement that the whole supply chain must become more procient in the understanding of reliability, in reliability analysis, and in project risk management to control the cost of reliability achievement to acceptable sector norms (Roberts et al., 2001, p. 8).

7. ORGANIZATIONAL CAPABILITY MODELS

Capability maturity models (CMM) provide a means to evaluate the level of maturity of practices within organizations that contribute to safety, reliability, and effective risk management. More formally, CMM models have been dened as tools used to assess the capability of an organization to perform the key processes required to deliver a product or a service (Strutt et al., 2006, p. 1096). These models allow owners to assess reliability capability within their company and throughout their supply chains. Originally adopted in the software industry (Paulk, Curtis, Chrissis, & Weber, 1993), CMM models have subsequently been applied to the management of risk in the offshore oil and gas industry (Sharp, Strutt, Busby, & Terry, 2002; Strutt et al., 2006), maintenance activities (Energy Institute, 2007), marine construction (Ren & Yeo, 2004), and subsea equipment (Sharp, Strutt, Terry, Galbraith, & Miles, 2006; Williams et al., 2003). CMM methods focus primarily on the key management processes and practices necessary for an organization to meet its strategic obligations and goals, including operational safety and reliability. Although detailed specication of the models varies across different contexts, a ve-stage hierarchical model that identies the organizations maturity level is common to all CMM applications (e.g., MacGillivray, Sharp, Strutt, Hamilton, & Pollard, 2007; Ren & Yeo, 2004; Strutt et al., 2006; Strutt & Brookes, 2007; Tiku, Azarian, & Pecht, 2007). For instance, the model described by Ren and Yeo (2004) assesses ve levels of maturity across three key capability areas relevant to complex product systems (organization culture, risk management processes, and strategic change management). A formal standard (IEEE P1624) has been recently proposed for the electronics industry (Gullo, 2009) that sets out key practices related to product reliability, describes
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6.2. Types of Work Group Organization

Different forms of work organization can be characterized in terms of purpose, membership, goals, and timescale (Wenger & Snyder, 2000).Conventional project teams are cross functional, composed of people whose combined knowledge and skills are needed to produce the required outputs; good working relationships are necessary to ensure trust and open communication within the team (McDermott, 1999). Members of a project team share common goals, interdependent work, and are jointly accountable for the results. When its task is complete, the team disbands. In contrast, formal work groups remain in place indenitely, are responsible for delivering products or services, and report to a group manager (Wenger & Snyder, 2000). The role of informal specialist groups has generated considerable interest in recent years; these communities of practice (CoPs) bring together personnel who share specic expertise with the aim of developing capabilities, creating and exchanging knowledge, and establishing common practices. Membership is selfselected and voluntary and, by using electronic communications, may extend worldwide. To be effective in the subsea industry, a CoP should include reliability specialists from operators, contractors, and suppliers,

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a method of assessment, and allows identication of improvement strategies. For present purposes, the CMM model (designated R-CMM) developed to assess the capability of organizations to manage reliability in subsea engineering (Strutt & Brookes, 2007) is the most directly relevant. In this model, shown in Table 1, organizational reliability processes and practices move from ad hoc and reactive through proactive, double-loop learning, across ve hierarchical levels. For an organization to reach a particular level of maturity, it must, of course, also satisfy all the lower levels; moreover, all groups (project teams, specialists, contractors, and suppliers) involved in the design, production, and deployment of a particular system should attain at least this level. Strutt and Brookes (2007) advocate the maturity level Managed (Level 4) as a minimum for organizations responsible for high-risk subsea projects, that is, those involving new technology (or a new application of existing technology), a new environment, and/or a new project team. However, for projects involving lower levels of technical risk, acceptable R-CMM levels may be less than Level 4; alternatively, the criteria for achieving the higher levels may be modied as appropriate to the requirements of relatively low-risk projects.

7.1. Assessment of Capability Maturity Levels

The denitions of each of the ve CMM maturity levels form a basis for devising assessment tools, taiTABLE 1. Reliability Capability Maturity Model Level 1 2 3 4 Maturity Uncontrolled Repeatable Dened Managed

lored to the particular focus of the assessment (e.g., safety, risk management, or reliability) (MacGillivray et al., 2007; Ren & Yeo, 2004; Sharp et al., 2006; Strutt & Brookes, 2007). In relation to reliability, the initial step is identifying the key processes associated with achieving reliability requirements and with reliability assurance and improvement. For each level of maturity, the criteria for each of the key reliability processes are then specied and a scoring system developed. Ratings on the key process are determined by survey and/or face-to-face discussion with managers and reliability specialists. Survey methods alone may not be adequate; Williams et al. (2003) found that faceto-face discussion was necessary to ensure that subsea suppliers understood the CMM items. A detailed case study of the development of reliability capability maturity criteria for each CMM level and the application of the assessment method in an electronics company are presented by Tiku et al. (2007). To provide a summary of maturity-level data, a mean value is usually calculated across the key processes, although, alternatively, the overall maturity score may be restricted to the lowest of the individual ratings (Strutt et al., 2006). Graphical presentation of the full set of ratings of key practices provides a more complete picture (see Figure 4). Several of the key practices shown in Figure 4 (e.g., management of change and life cycle transitions, feedback and organizational learning, and supply chain management) reect organizational aspects of reliability considered earlier in

Description The organization has limited experience and is at a learning and development stage. The organization can repeat what it has done before, but not necessarily dene what it does. The organization can say what it does and how it goes about it. The organization can control what it does in the way of processes. It species requirements and ensures that these are met through feedback. The organization is best practice, capable of learning and adapting itself. It not only uses experience to correct any problems but also uses experience to change the way it operates.

Characterized by: Ad hoc, reactive Prescriptive Measured, open-loop Single-loop learning Adaptive processes; double-loop learning

Optimized

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this review. Graphical approaches can also be extended to compare different suppliers by examining the extent of overlap between customer requirements and supplier reliability capabilities (e.g., Tiku et al., 2007). These methods provide a relatively simple way of assessing and interpreting CMM levels, although the use of numerical scores has been criticized (Strutt et al., 2006). Moreover, there appear to have been no psychometric evaluations of the reliability and validity of CMM methods, such as would be normally used in the quantitative assessment of organizational or individual characteristics.

8. ORGANIZATIONAL CULTURE AND RELIABILITY IMPROVEMENT

The process of culture change to enhance reliability and safety has been widely documented in organizational settings in which errors and failures have potentially serious consequences, for example, health care, transport, aviation, and space exploration (e.g., Benn, Healey, & Hollnagel, 2008; Lukas et al., 2007; Maya et al., 2005; McFadden, Henagan, & Gowen, 2009; Pollitt, 2009; Resnick, 2007; van Stralen, Calderon, Lewis, & Roberts, 2008). Drawing on principles taken from the operation of high-reliability organizations, these studies highlight common themes reecting the importance of transformational leadership, actively engaging staff in problem solving, alignment of goals across all levels of the organization, integration to bridge traditional intraorganizational boundaries, training and personal development initiatives, positive error management and avoidance of a blame culture, facilitating the ow of information throughout the organization, and encouraging teamwork. Within these general guidelines, the process of culture change has to be tailored to the particular circumstances and reliability requirements of each organization (van Stralen et al., 2008). Moreover, even when critical elements of change required in a particular organization have been identied, the change process necessitates long-term commitment and effort from the entire organization, if it is to be successfully negotiated and sustained. Thomas (2005) emphasizes the need to create a readiness for change within the organization before the introduction of any changes; the development of readiness requires leaders to have a clear vision of what they want to achieve, to communicate this vision throughout the organization, to involve people at all levels in detailed planning, and to provide training in the new skills required. In describing approaches to culture change, Thomas sets out eight elements of change (leadership, work process, structure, group learning, technology, communications, interrelationships, and rewards), and provides an assessment method for ongoing evaluation of each of these elements in relation to the major dimensions of culture. He also identies a number of possible pitfalls likely to be encountered during the change process and how they can be avoided. In providing this practical guide to organizational culture change, Thomas is primarily concerned with maintenance reliability; however, the material is also applicable to
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7.2. Reliability Capability Maturity Levels in the Subsea Industry

A 2003 survey of subsea equipment suppliers found average CMM scores of 2.22.75 (Williams et al., 2003). These scores fell well short of the recommended level (4 or above) considered acceptable for high-risk subsea projects (Strutt & Brookes, 2007); they also compared unfavorably with levels of 4.04.5 estimated for the automotive and aeronautical industries. The transition from Level 2 to Level 3 was found to be the most difcult upward progression for companies to achieve, while moving between Levels 3 and 4 was more readily attained. In spite of the increased attention given to equipment reliability by oil and gas companies in recent years (e.g., Holmer & Moran, 2008; Horan et al., 2007), and the introduction of the American Petroleum Institute 17N standard (API, 2009), the subsea industry as a whole has not yet fully implemented systematic reliability management practices. Initiatives that would allow subsea suppliers operating at lower capability levels to make signicant steps toward meeting at least Level 3 R-CMM criteria are described by Williams et al. (2003). The initiatives include supply chain management; setting and allocating reliability requirements; reporting, tracking, and analyzing performance data; and improving organizational learning about reliability. These suggestions further highlight the role of observation and data analysis in contributing to reliability improvement. From a sociotechnical viewpoint, decentralizing responsibility and authority for correcting variances in design and manufacture to lower levels in the hierarchy could also serve to facilitate improvement in the reliability of core task performance (see Section 3.1).

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Figure 4

Example of graphical representation of R-CMM ratings on key practices (Adapted from Strutt & Brookes, 2007).

organizations seeking to enhance reliability in product design and manufacture. In the oil/gas industry, specically, there is a growing awareness that creating a reliability-oriented organizational culture can make a signicant contribution to the reliability of subsea equipment and other complex production systems, and that the role of organizational culture should be regarded as no less important than the technical and procedural aspects of reliability improvement (e.g., Holmer & Moran, 2008).

9. DISCUSSION AND CONCLUSIONS

To achieve maximum reliability in the development and installation of subsea systems, high levels of cooperation, coordination, and communication between the owner or operating company and the entire chain of contractors, suppliers, and specialists is required. At each stage in the life cycle, close integration across organizations with different structures, functions, and cultures is critical. In particular, failures of alignment across organizations may mean that unidentied or unmanaged errors are not recognized until the equipment is operational and correction is extremely costly. Figure 5 summarizes the key internal and external inuences on reliability identied in the present review and indicates the points in the life cycle at which they impact on the nal operational reliability achieved. Of

primary importance among internal inuences is organizational culture, dened as the combination of the attitudes, experiences, beliefs, values, and norms of an organization (see Section 3). Internal inuences (which also include knowledge management, work group structure and number of hierarchical levels, and HR policies and practices) act within organizations to inuence each stage of the design, manufacture, installation, and operation of the system. External factors (such as how progressions across the phases are managed, the length of the supply chain and the capability of the different companies involved, time and nancial pressures, and location, language, and logistics) impact on the effectiveness of transitions across successive stages of the life cycle and, hence, on the reliability of the nal system. In addition, the contractual terms and conditions that regulate successive stages of the design and manufacturing process play a signicant role in determining the behavior and performance of the companies concerned (Smalley & Nilsen, 2007). This issue is important as supply chains in the subsea industry typically involve coordinating and monitoring multiple separate contracts. Research into the extent to which specic contractual terms and conditions (e.g., nature of incentives and penalties) inuence the performance of supply chain companies would allow improved contract management.

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Figure 5

External and internal inuences at different phases of a subsea development.

More generally, research into risk and reliability has been identied as one of the key practices that contribute to double-loop learning and the achievement of higher levels of capability maturity in the subsea industry (Strutt & Brookes, 2007). Several aspects of the subsea design and manufacturing process have been rarely investigated and would merit systematic research attention. For instance, little is currently known about the relative importance of the internal and external factors shown in Figure 5 in achieving high reliability in subsea systems (particularly the avoidance of early-life failures) and their specicity in relation to the stages of equipment design, manufacture, and installation. Other research that could contribute to enhanced reliability includes the identication of ways in which differences in organizational culture may adversely affect communication and cooperation across different organizations in the supply chain, and thus increase the risk of errors. Such studies would potentially allow critical elements in the life cycle of subsea system development to be identied and addressed and, hence, the risk of operational failure reduced. In the longer term, developing quantitative models that incorporate

organizational factors in predictng reliability in subsea systems are needed; Zio (2009) discusses some of the issues raised by such models. The oil/gas industry faces increasing challenges in developing deeper elds in more hazardous locations than those currently in production, while ensuring long-term, fault-free operation of equipment deployed subsea. These technical challenges, coupled with public concern about potential environmental damage resulting from equipment failures, underline the need for continuing reliability improvement in subsea systems. To date, efforts to improve reliability have focused primarily on nding technical solutions to complex engineering problems. In contrast, the material outlined in this review highlights the importance of developing and supporting organizational environments that promote the achievement of high reliability throughout the organization, within each vendor or contracting group, and between the various links in the supply chain. In this endeavor, organizational culture, knowledge management, human resource policies, and organizational structure all play signicant roles. These issues merit the attention of operating companies and their suppliers, and of the oil/gas industry as a whole,

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to achieve the exceptionally high reliability required of subsea production systems.

ACKNOWLEDGMENTS
We gratefully acknowledge funding for this work from the Western Australian Energy Research Alliance (WAERA) and the award of a University of Western Australia Gledden Visiting Fellowship to the senior author. We would also like to thank Margo St Quintin for her assistance in developing the gures used in this article. References
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